Google Automotive – Wobbly wheels

Android Automotive is far from a foregone conclusion.

• Google clearly still thinks of vehicles as nothing more than handsets on wheels which I think is the reason why products that were supposed to use it do not and why the software was conspicuously absent at what is now the world’s biggest car show, CES.
• Google has put a brave face on what is turning out to be a difficult situation where the automobile may yet still slip through its fingers.
• Google cares about cars because more than 95% of all vehicle journeys are made with intent.
• If one can figure out precisely what that intent is, then there is a substantial monetizable opportunity both through selling services based on that intent or selling targeting advertising.
• RFM has estimated (see here) that this is a very large opportunity that is very much worth Google’s (and everyone else’s) time and effort to pursue.
• Android Automotive is different from Android Auto because it is a full implementation of Android software in the infotainment unit rather than an API wrapper that allows apps on Android phones to run on the infotainment unit of the vehicle.
• Android Auto failed to get Google access to the sensor data of the vehicle which is what it needs to conquer the digital vehicle.
• Hence, it switched to a deeper implementation and licensing structure that would ensure got access to this data.
• Early proponents were Audi and Volvo who signed up over 2 years ago but vehicles that were supposed to ship with the software have not appeared in the market.
• The only concrete release that seems to be on track is Volvo’s all-electric Polestar 2 which should be formally launched shortly but will not go into production until 2020.
• Even then, its appeal will be limited as the issues around range anxiety and charging network infrastructure for electric vehicles are still very far from being solved.
• Audi does not seem to have a concrete model with which to launch Android Automotive leading me to think that this relationship is on shaky ground.
• Furthermore, I also think that the turmoil at Renault Nissan also comes at a very bad time.
• The alliance itself looks very shaky at the moment and may even fall apart entirely which could take the relationship with Google with it.
• Finally, at CES there was no demo of Android Automotive on Google’s stand despite 2 vehicles taking up a large amount of space.
• Google execs on the stand became evasive and vague when asked why there was no demo and what had happened to vehicle launch plans.
• The net result is that I don’t think that the Google Automotive strategy to get access to vehicle sensor data is going nearly as smoothly as expected.
• Google’s mindset is clear from its own commentary (see here) which often mentions vehicle makers alongside handset makers implying that it views them in the same light.
• Android handset makers have become just another conduit by which Google can deliver its ecosystem to its users.
• Because it is Google that users identify with, it is Google that generates the user preference allowing it to reap almost all of the profits leaving handset makers with almost nothing.
• This is because any digital differentiation they may have had has long been ceded to Google.
• This has yet to happen in the vehicle and the only thing standing between vehicle makers and becoming handsets on wheels is the lock that they currently have on the digital data that the vehicle generates.
• OEMs need to keep Google out of their sensor data and at the same time they must improve their user experiences so that drivers stop using their phones and engage with the infotainment unit.
• I think that this is critical to their future and failure will result in a wretched existence where they are unable to offset declining vehicle sales with digital service revenues and profits.
• This could easily end in massive consolidation and vehicle makers becoming incidental in their own industry.